VineLesson 22 · Written for kid, teen, and little
Dividends — getting paid to own
Some companies share profits through dividends.
Some companies share their profits with the people who own them — that payment is called a dividend. So just by holding the stock, you can get a little cash, often every few months. Reinvesting that cash to buy even more shares turns it into the compounding snowball working for you. 💸
Words to know
7Dividend
Cash a company pays you just for owning its shares, usually every few months.
DRIP
Dividend Reinvestment Plan — automatically using your dividends to buy more shares.
Dividend yield
The yearly dividend divided by the stock price, shown as a percent.
Payout ratio
The share of a company's profit that it pays out as dividends.
Total return
Your full gain — the stock's price growth PLUS the dividends it paid.
KO
The ticker (short code) for Coca-Cola stock.
VOO
An index fund that holds about 500 of the biggest US companies in one basket.
Imagine that your 100 Coca-Cola shares pay a $45 dividend. You are 14, an adult helps with the account, and your long-term plan calls for reinvesting this money rather than spending it. Which choice follows that plan?
In the full lesson
- 1Make the call
Vine has 107 lessons like this one, each written three ways so a 7-year-old and a 17-year-old both get a version that fits.
The practice portfolio is open.
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